The effects of immigration in frictional labor markets: Theory and empirical evidence from EU countries

Abstract

Immigrants are new comers in a labor market. As a consequence, they lack of social networks and other country specific and not directly productive valuable assets affecting their relative bargaining position against employers. We introduce this simple observation into a matching model of the labor market and show that immigrants increase employment prospects of competing natives. To test the predictions of our model, we exploit yearly variations between 1998 and 2004 in the share of immigrants within occupations of 12 European countries. We identify the causal impact of immigrants on natives' employment rate using an instrumental variable strategy based on historical settlement patterns across host countries and occupations by origin countries. We find that natives' employment rate increases in occupations and sectors receiving more immigrants. Moreover, we highlight the heterogeneity of this impact across groups of immigrants and host countries along dimensions that affect immigrants-natives relative reservation wages.

Immigration and Native Employment. Evidence from Italian Provinces in the Aftermath of the Great Recession

“…This positive response of native employment was also derived from a group of EU countries that includes Italy for the period 1998‐2004 by Moreno‐Galbis and Tritah (2016). In addition to the complementarity between immigrants and natives, these authors argued that immigrants could be exerting a positive externality since they are more profitable workers (the productivity‐wage gap is wider for immigrants than for natives).…”

“…González and Ortega (2011) for Spain. Overall, it can be said that the evidence from immigration in Europe is also ambiguous, although results in recent studies that exploit variability among European countries point to a more intense employment response in economies with less flexible institutions (Angrist & Kugler, 2003; D'Amuri & Peri, 2014; Moreno‐Galbis & Tritah, 2016). In the specific case of Italy, the literature on the employment effect of immigration is surprisingly scarce, particularly when it comes to the impact of the most recent immigration episodes.…”

An Offer that You Can't Refuse? Agrimafias and Migrant Labor on Vineyards in Southern Italy

“…There is a vast literature on the impacts of immigration on productivity and labor market outcomes has developed (for overviews see Okkerse, 2008;Peri, 2016). These analyses are performed, e.g., for the US (e.g., Peri, 2012), the EU (e.g., Moreno-Galbis and Tritah, 2016), and also Italy (e.g., Venturini and Villosio, 2008;De Arcangelis et al, 2015). Very heterogeneous findings show both positive and negative effects on native wages, employment, and productivity (see Dustmann et al, 2016b, and citations therein).…”

The Allocation of Immigrant Talent: Macroeconomic Implications for the U.S. and Across Countries

“…Yet, immigrants often face severe barriers to integrate into foreign labor markets, preventing them from working in the occupations that they are most productive at and restricting their productive potential. For instance, immigrants' p otential is often limited by o ccupational regulations and licensing (Peterson, Pandya, and Leblang 2014), lack of destination-specific skills (Moreno-Galbis and Tritah 2016), or discrimination (Oreopoulos 2011). While micro-level evidence on various types of barriers faced by immigrants has been extensively documented in the literature, understanding their relative importance and aggregate effects to aid in the design of immigration and labor market policies has remained elusive.…”